PPG Industries, Inc. v. Transamerica Insurance

Opinion

KENNARD, J.—

In each policy of liability insurance, California law implies a covenant of good faith and fair dealing. This implied covenant obligates the insurance company, among other things, to make reasonable efforts to settle a third party’s lawsuit against the insured. If the insurer breaches the implied covenant by unreasonably refusing to settle the third party suit, the insured may sue the insurer in tort to recover damages proximately caused by the insurer’s breach.

*313Here, a third party brought a personal injury action against the insured resulting in a judgment against the…